3.1 Dismissing an incumbent strata manager | Owners Corporation Network

3.1 Dismissing an incumbent strata manager

Some points to consider if terminating are:

  • The 2016 Act contains provisions where the agency agreement cannot exceed a period of 3 years and automatically terminates on the expiry date. A strata manager can only be appointed for 12 months at the First Annual General Meeting.
  • The term of appointment of a strata managing agent may be extended by the strata committee for successive period of up to 3 months after it would otherwise expire (but not for any period that would extend beyond the date of the next annual general meeting) pending a decision as to the reappointment of the strata managing agent.
  • However, if the strata committee has extended the term of the appointment as noted above, then the strata committee must give the strata managing agent at least 1 month's notice if they have decided not to reappoint that agent or further extend the term.
  • If the agent is being dismissed during a minimum term contractual period, advice should be sought in regards to the termination conditions, balance of the agreement, repudiation, including payments etc which are detailed in the agent's contract. Termination of a contract may occur where there is poor performance by a strata manager.
  • A strata manager can only be dismissed, or have a delegation changed, by a simple majority resolution at a general meeting of the owners corporation. It cannot be done by the strata committee alone.
  • Written notice of the decision must be given to that agent via the minutes of a general meeting. 
  • Obstacles a scheme may face in the process of terminating an agreement may include difficulty in convening a meeting, obtaining strata roll and documents from the strata manager, liens and refusal to hand over the scheme’s records.
  • It would be unwise to terminate a strata manager’s agreement before an agreement with a new strata manager has been settled. Otherwise the owners corporation could find itself without a strata manager. Remember the agreement with the new strata manager will have to be approved by owners in a general meeting.
  • When intending to terminate a strata manager, it is more courteous and tactical to run a general meeting without the help of the existing agency (i.e. for the secretary to set a date, time and do the mail out themselves, with the help of the new agency for the wording of necessary motions. The Secretary is able to do this – the strata agency only runs meetings under delegation of authority. It also makes sense for the committee to communicate to all owners about the reasons for the change and about the new recommended agency.
  • To be efficient, when the committee puts a motion to terminate a strata agency, it would usually also include its own motion to engage a particular new agency. That way the whole process is carried out at one General Meeting.

Even if the outgoing strata manager is cooperative, you can expect considerable disruption to processes as a new working relationship is established.

 

 

 

Relevant NSW Legislation: Strata Schemes Management Act (2015)

Section 49 & 50: How is a strata managing agent appointed?